Warren Buffett Consults with Rubber Duckie to Invest $5 bil into Bank of America

Buffett said he conjured the idea while in the bathtub

Rubber Duckie, you're so fine

And I'm lucky that you're mine

ABC News Money
By: Susanna Kim
August 25, 2011

Berkshire Hathaway, led by billionaire Warren Buffet, announced it will buy $5 billion worth of Bank of America shares in a private offering. BofA stock soared though U.S. stock markets were down Thursday morning on yet another gloomy unemployment claims report.

Buffett said he conjured the idea while in the bathtub on Tuesday. He called Brian Moynihan, chief executive officer of Bank of America, on Wednesday, he told CNBC.

Stock of Bank of America, the largest bank in the U.S., rose over 20 percent after the market's open but came down slightly later in the morning. At 10:40 AM eastern time, the stock was up 17 percent to $8.18 a share. The Dow Jones industrial average fell 129 points to 11,193.

Jobless claims climbed by 5,000 to 417,000 in the week ended Aug. 20, the Labor Department reported today. Part of the rise was due to new applications from Verizon, where workers had been striking over a contract deal.

Bank of America stock had plunged 47 percent for the year, as embattled CEO Moynihan has tried to manage its pile of bad mortgages and its exposure to the European debt crisis.

But Warren Buffett praised Monyihan and the bank in a statement.

"Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it," Berkshire Hathaway chairman and chief executive officer Warren Buffett said in a press release. "I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That's what customers want, and that's the company's strategy."  Read more about the rubber duckie investment

Wall Street Banks Pay $50 million To Deal with Guilt Pre-Memorial Day 2011

It's All Better Now that The Big Wall Street Banks

have Apologized...NOT!!!

4,454 soldier deaths in Iraq,

1,598 in Afghanistan and

Jamie (I missed the Vietnam draft

by 3 years) Dimon deeply apologizes...

By Justin Blum
May 26 (Bloomberg) -- Bank of America Corp. and Morgan Stanley units will pay $22.4 million to resolve U.S. allegations that they improperly foreclosed on active-duty soldiers, including some who suffered severe injuries, without first obtaining court orders.

The Bank of America unit will pay $20 million to settle a lawsuit alleging improper foreclosure on about 160 members of the military between 2006 and 2009, the Justice Department said in a statement today. Morgan Stanley’s Saxon Mortgage Services Inc. unit will pay $2.35 million to resolve a lawsuit alleging it improperly foreclosed on 17 service members from 2006 to 2009.

“The men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully while they are bravely putting their lives on the line on behalf of their country,” Thomas Perez, the assistant attorney general overseeing the Justice Department’s civil rights division, said in today’s statement.

The foreclosures violated the Servicemembers Civil Relief Act, which was enacted to shield deployed military personnel from financial stress, according to the Justice Department.

‘Not Acceptable’

“These errors are not acceptable, and we certainly regret them,” Terry Laughlin, head of Bank of America’s unit managing foreclosures and defaulted loans, said in an e-mail. “While most cases involve loans originated by Countrywide and the improper foreclosures were taken or started by Countrywide prior to our acquisition, it is our responsibility to make things right.”

Morgan Stanley apologizes to the military families affected by the mistakes, Mark Lake, a spokesman for the New York-based bank, said in an e-mailed statement.

“Our servicemen and women deserve the highest level of customer service,” Lake said. “Saxon has taken meaningful steps to ensure it has appropriate policies and procedures in place to comply fully with the Servicemembers Civil Relief Act.”

Last month, JPMorgan Chase and Co. agreed to pay $27 million in cash to about 6,000 active-duty military personnel who were overcharged on their mortgages, cut interest rates on soldiers’ home loans and return homes that were wrongfully foreclosed upon, according to settlement terms filed in federal court in Beaufort, South Carolina.

JPMorgan Chief Executive Officer Jamie Dimon apologized this month for improperly foreclosing on U.S. military personnel.

‘Deeply Apologize’

“We deeply apologize to the military, the veterans, anyone who’s ever served this country,” Dimon said during the New York-based bank’s annual shareholder meeting.

In many instances, the lenders knew or should have known about the military status of the service members, according to the Justice Department. Victims included people who served in Iraq and Afghanistan.

Some of those in the military foreclosed on by Saxon were severely injured in the line of duty or suffer from post- traumatic stress disorder, according to the Justice Department.

Bernie Sanders: Time for American Corporations to Pay Their Fair Share and give our grandchildren a break

Yes America, it pays well to have friends in high places

Jeff Immelt (General Electric CEO) and heading

President’s Council on Jobs and Competitiveness

Senator Bernie Sanders

BURLINGTON, Vt., March 27 - While hard working Americans fill out their income tax returns this tax season, General Electric and other giant profitable corporations are avoiding U.S. taxes altogether.

With Congress returning to Capitol Hill on Monday to debate steep spending cuts, Sen. Bernie Sanders (I-Vt.) said the wealthiest Americans and most profitable corporations must do their share to help bring down our record-breaking deficit.

Sanders renewed his call for shared sacrifice after it was reported that General Electric and other major corporations paid no U.S. taxes after posting huge profits. Sanders said it is grossly unfair for congressional Republicans to propose major cuts to Head Start, Pell Grants, the Social Security Administration, nutrition grants for pregnant low-income women and the Environmental Protection Agency while ignoring the reality that some of the most profitable corporations pay nothing or almost nothing in federal income taxes.

Sanders compiled a list of some of some of the 10

worst corporate income tax avoiders.

Time to remove corporations fair share

off the backs of our grandchildren

Vigilant Grandpa

1. Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
2. Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
3. Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
4. Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
5. Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.
6. Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.
7. Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.
8. Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.
9. ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.
10. Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.

Sanders has called for closing corporate tax loopholes and eliminating tax breaks for oil and gas companies. He also introduced legislation to impose a 5.4 percent surtax on millionaires that would yield up to $50 billion a year. The senator has said that spending cuts must be paired with new revenue so the federal budget is not balanced solely on the backs of working families.

"We have a deficit problem. It has to be addressed," Sanders said, "but it cannot be addressed on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and the largest corporations in this country have got to contribute. We've got to talk about shared sacrifice."

In Prison for Taking a Liar Loan (but not any banksters Making Liar Loans)

As part of his sentence, Mr. Engle was

ordered to pay $262,500 in restitution to the

owner of his mortgages.

And what institution might that be?

You guessed it: Countrywide,

now owned by Bank of America.

Judge Accepts S.E.C.’s $150 Mil Fine Deal

With Bank of America

“half-baked justice at best”

February 22, 2010 

The New York Times
March 25, 2011
By Joe Nocera

A few weeks ago, when the Justice Department decided not to prosecute Angelo Mozilo, the former chief executive of Countrywide, I wrote a column lamenting the fact that none of the big fish were likely to go to prison for their roles in the financial crisis.

Soon after that column ran, I received an e-mail from a man named Richard Engle, who informed me that I was wrong. There was, in fact, someone behind bars for what he’d supposedly done during the subprime bubble. It was his 48-year-old son, Charlie.

On Valentine’s Day, the elder Mr. Engle said, his son had entered a minimum-security prison in Beaver, W.Va., to begin serving a 21-month sentence for mortgage fraud. He then proceeded to tell me the tale of how federal agents nabbed his son — a tale he backed up with reams of documents and records that suggest, if nothing else, that when the federal government is truly motivated, there is no mountain it won’t move to prosecute someone it wants to nail. And it was definitely motivated to nail Charlie Engle.

Mr. Engle’s is a tale worth telling for a number of reasons, not the least of which is its punch line. Was Mr. Engle convicted of running a crooked subprime company? Was he a mortgage broker who trafficked in predatory loans? A Wall Street huckster who sold toxic assets?

No. Charlie Engle wasn’t a seller of bad mortgages. He was a borrower. And the “mortgage fraud” for which he was prosecuted was something that literally millions of Americans did during the subprime bubble. Supposedly, he lied on two liar loans.

“The Department of Justice has made prosecuting financial crimes, including mortgage fraud, a high priority,” said Neil H. MacBride, the United States attorney for the Eastern District of Virginia, in a statement. (Mr. MacBride, whose office prosecuted Mr. Engle, declined to be interviewed.)

Apparently, though, it’s only a high priority if the target is a borrower. Mr. Mozilo’s company made billions in profit, some of it on liar loans that he acknowledged at the time were likely to be fraudulent and which did untold damage to the economy. And he personally was paid hundreds of millions of dollars. Though he agreed last year to a $67.5 million fine to settle fraud charges brought by the Securities and Exchange Commission, it was a small fraction of what he earned. Otherwise, he walked. Thus does the Justice Department display its priorities in the aftermath of the crisis.

It’s not just that Mr. Engle is the smallest of small fry that is bothersome about his prosecution. It is also the way the government went about building its case. Although Mr. Engle took out the two stated-income loans, as liar loans are more formally called, in late 2005 and early 2006, it wasn’t until three years later that his troubles began.

As a young man, Mr. Engle had been a serious drug addict, but after he got clean, he became an ultra-marathoner, one of the best in the world. In the fall of 2006, he and two other ultra-marathoners took on an almost unimaginable challenge: they ran across the Sahara Desert, something that had never been done before. The run took 111 days, and was documented in a film financed by Matt Damon, who served as executive producer and narrator. Mr. Engle received $30,000 for his participation.

The film, “Running the Sahara,” was released in the fall of 2008. Eventually, it caught the attention of Robert W. Nordlander, a special agent for the Internal Revenue Service. As Mr. Nordlander later told the grand jury, “Being the special agent that I am, I was wondering, how does a guy train for this because most people have to work from nine to five and it’s very difficult to train for this part-time.” (He also told the grand jurors that sometimes, when he sees somebody driving a Ferrari, he’ll check to see if they make enough money to afford it. When I called Mr. Nordlander and others at the I.R.S. to ask whether this was an appropriate way to choose subjects for criminal tax investigations, my questions were met with a stone wall of silence.)

Mr. Engle’s tax records showed that while his actual income was substantial, his taxable income was quite small, in part because he had a large tax-loss carry forward, due to a business deal he’d been involved in several years earlier. (Mr. Nordlander would later inform the grand jury only of his much lower taxable income, which made it seem more suspicious.) Still convinced that Mr. Engle must be hiding income, Mr. Nordlander did undercover surveillance and took “Dumpster dives” into Mr. Engle’s garbage. He mainly discovered that Mr. Engle lived modestly.

In March 2009, still unsatisfied, Mr. Nordlander persuaded his superiors to send an attractive female undercover agent, Ellen Burrows, to meet Mr. Engle and see if she could get him to say something incriminating. In the course of several flirtatious encounters, she asked him about his investments.

After acknowledging that he had been speculating in real estate during the bubble to help support his running, he said, according to Mr. Nordlander’s grand jury testimony, “I had a couple of good liar loans out there, you know, which my mortgage broker didn’t mind writing down, you know, that I was making four hundred thousand grand a year when he knew I wasn’t.” 
Complete Article...Keep Reading

Banks: Still too big, Still can't fail (so much for financial reform)

The biggest banks are bigger than

they were before the last crisis.

The Wall Street Journal
March 5, 2011

The 2010 Dodd-Frank law was sold as a way to prevent future bank bailouts. But so few people believe it that Sheila Bair, chairman of the Federal Deposit Insurance Corporation, has embarked on a campaign to convince the markets that next time really will be different.

On Friday Ms. Bair sent a letter to Standard and Poor's, the giant credit-ratings agency. S and P, like most of the financial community, suspects that Washington will open the checkbook again when Wall Street stumbles. Therefore the firm has given the largest financial institutions higher credit ratings to reflect this potential government support.

Ms. Bair's note assures S and P that she will put the wood to big banks and their creditors if they end up in the FDIC's new resolution process for systemic firms. Therefore, she argues, the giant banks should no longer receive higher ratings, because Uncle Sam isn't coming to their rescue.

We guess the financial crisis really is over when a senior federal regulator feels confident urging downgrades of big banks. And on the merits, if Ms. Bair were the only Washingtonian with a say in this matter, investors might start to believe that the freedom to fail really has been restored.

But investors are still expressing a different belief. Recent data from the Federal Reserve and Ms. Bair's FDIC confirm that the biggest banks still enjoy advantages over their smaller rivals, and by some measures these advantages have been growing since the July enactment of Dodd-Frank.

The FDIC data show how much banks pay to borrow money. One would expect that if Dodd-Frank really eliminated the possibility of government assistance for the largest banks and their creditors, then such creditors would be no more or less willing to lend to the big banks than to their smaller competitors. But in the second half of 2010, right after the passage of the law, banks with more than $100 billion in assets clearly enjoyed a lower cost of funds than banks in every other category.

While the FDIC collects data on banks, the Federal Reserve collects data for bank holding companies. Its data only go through the third quarter, but they also show a funding advantage for the biggest players. And an analysis by Mike Mayo of Credit Agricole Securities (USA) shows that for all of 2010, the 10 largest bank holding companies, on average, paid 29 basis points less on interest-bearing liabilities than the next 40 bank holding companies.

The FDIC concedes that big banks enjoy funding advantages, but not because the government will bail them out. The agency says the product mix at large firms helps them do especially well in low-interest-rate environments like the current one.

The FDIC has a point. The big banks also enjoyed particularly cheap funding relative to competitors in the 2002-2004 period of very easy money. And whereas academic research once suggested that banks couldn't draw much additional benefit from economies of scale once they had grown to a few hundred million dollars of assets, more recent data suggest that even the biggest banks can gain efficiencies as they grow and deploy automated systems across vast territories.

But the big guys have been enjoying free money for years since the crisis, and the benefits of scale for even longer. If Dodd-Frank was really working as advertised, wouldn't the loss of special government protection create at least a competitive speed bump? Some claim that mandated capital raises after the crisis have made them a safer investment, but those changes were underway long before last summer's passage of Dodd-Frank.

What's remarkable about the FDIC data is that the biggest banks seem to be accelerating through the first months of Dodd-Frank. Looking at the FDIC's data on non-deposit, interest-bearing liabilities, the big guys' funding advantage over the other banks in the second half of last year was even larger than in the first half—before the great "reform" was enacted. The funding advantage enjoyed by banks with more than $100 billion in assets over those in the $10-$100 billion range rose from 71 basis points in the first quarter to 78 basis points in the third quarter, which began with President Obama signing the bill and proclaiming an end to too-big-to-fail. The advantage increased to 81 in the fourth quarter. It's good to be the kings of banking in a Dodd-Frank world.

In a Wednesday visit to the Journal, Kansas City Fed President Thomas Hoenig said that the banking giants' "huge" edge over their smaller rivals is due in large part to government support.

Yes, there is new authority for Ms. Bair's FDIC to resolve large institutions, but will it even be used? In a recent speech, Mr. Hoenig noted that "there are important weaknesses with this framework. In particular, the final decision on solvency is not market driven but rests with different regulatory agencies and finally with the Secretary of the Treasury, which will bring political considerations into what should be a financial determination."

Mr. Hoenig reminded us that the biggest institutions are even bigger than they were before the financial crisis, and that he expects more bailouts of financial giants in the next crisis, regardless of "who the Secretary of the Treasury is." That sounds right to us, which is also what the market is saying. Dodd-Frank is making the big banks bigger and more protected than ever against failure.

Mike Mayo on CNBC:

Do you truly believe the banks

will not need another bailout?
Well...???

Grandpa believe Mr. Mayo could experience

some acid reflux from his bullish call

on Bank of America...time will tell...

3,800 Bankers Went to Jail after S and L Crisis. Dylan Ratigan asks where are the handcuffs today?

February 4, 2011
Dylan Ratigan and Nevada Attorney General Catherine Cortez Masto discuss why several states are suing Bank of America over mortgage and consumer fraud.

3,800 bankers went to jail resulting from the S and L crisis and today, not one bankster has seen a jail cell during this massive mortgage fraud commited by Wall Street Banks. Link to other Dylan Ratigan videos addressing the very same topic.

Visit msnbc.com for breaking news, world news, and news about the economy

Wall Street Compensation Sets Another Record at $135 billion (9+ miles of $1,000 bills)

Seneca Niagara Casino Hotel and Tower is 358' Tall

Stack of $1,000 bills to the Very Top of this Building equals $1 bil

Wall Street Compensation in 2010 is 135 of these buildings

The Wall Street Journal
By Aaron Lucchetti and
Stephen Grocer
2/2/2011

When it comes to paychecks, Wall Street's law of gravity is back in full force: What goes down must come back up.

In 2010, total compensation and benefits at publicly traded Wall Street banks and securities firms hit a record of $135 billion, according to an analysis by The Wall Street Journal. The total is up 5.7% from $128 billion in combined compensation and benefits by the same companies in 2009.

The increase was fueled by a revenue rebound as the financial crisis recedes in the rearview mirror. At 25 large financial firms that have reported full-year results, revenue rose to $417 billion, another all-time high, even though last year's 1% increase was just a fraction of the industry's revenue jolt from 2008 to 2009 as trading and investment banking sprang back to life.

"Things are shifting back to where they were before," said J. Robert Brown, a law professor at the University of Denver who studies compensation and corporate-governance issues.

Buried in the numbers, though, are signs of how Wall Street's pay culture is bending in response to pressure from regulators and shareholders. Last year, deferred compensation made up as much as half of total pay, up from about a third previously, estimates Alan Johnson, managing director of Johnson Associates Inc., a New York pay consultant.

Bank of America Chief Executive Brian Moynihan got a 67% bump in his total compensation for 2010, the company said Monday. Goldman Sachs Group Inc. tripled the salary of Chairman and CEO Lloyd C. Blankfein and increased his stock-based bonus 40% to $12.6 million. Rest of $135 Billion Record Compensation

Huffington Post Also Weighs In

Wall Street pay is rising, while income for normal Americans has stagnated.

Even as the real economy limped, financial firms paid employees a record sum last year, the Wall Street Journal reports. In 2009, the last full year data are available, average wages for Americans fell 1.5 percent from the previous year, according to the National Average Wage Index. Median household income in 2009 was "not statistically different" from 2008, according to the Census Bureau.

But total pay at Wall Street firms rose 5.7 percent in 2010, as the 25 companies that have already reported results shelled out a record $135 billion. Even as regulators pressured firms to alter compensation, prominent executives got big pay bumps, seeming to suggest that the former Wall Street culture has emerged virtually unscathed from the recession.

Grandpa would be Remiss Without Affording Tim Geithner

Recognition and Accolades for His Contributions

to those Hard Working Folks on Wall Street

Treasury Secretary Timothy Geithner tackles five Myths about TARP: 1) cost taxpayers hundreds of billions of dollars, 2) was a gift for Wall Street that did nothing for Main Street, 3) left our financial system in weakened condition, 4) increased concentration in the financial system, and 5) served as the centerpiece of the Obama Administration’s strategy to control the economy.

Merrill (Bank of America) Pays $10 mil to hop over the Chinese Wall

Remember the Chinese Wall, you know, the wall that separates Wall Street proprietary traders and those placing client orders. Like when you call your financial advisor to place a trade assuming it is between you and the advisor. Yeah right! Oh your order was filled, however you paid more than you had to because the information was shared with the proprietary traders so they could buy ahead of you, make a few pennies and sell you their shares at a higher cost.

Remember though, these are the fine folks that received a TARP bailout in order to prevent financial armageddon and it was good for we Main Street folk. When they get caught with their hand in the cokkie jar, just write out a check and admit to NOTHING!

By Jonathan Stempel
1/25/2011

(Reuters) - Bank of America Corp's Merrill Lynch unit agreed to pay $10 million to settle U.S. Securities and Exchange Commission charges that it fraudulently misused customer orders so it could trade for its own benefit.

The settlement stemmed from SEC charges that Merrill used the order information to place proprietary trades on a desk it no longer operates. The SEC also accused Merrill of charging hidden trading fees to institutional and wealthy customers.

Merrill did not admit wrongdoing in agreeing to settle.

"It's a slap on the wrist," said David Robbins, a partner at the law firm Kaufmann, Gildin, Robbins & Oppenheim LLP in New York and a former compliance chief at the American Stock Exchange. "This penalty is like a traffic ticket. If the desk had still been around, you can be sure the sanction would have been to close it down."

According to the SEC, from February 2003 to February 2005 Merrill operated a proprietary trading desk on its equity trading floor in New York known as the Equity Strategy Desk.

It said that while Merrill told customers their orders would generally be kept private, traders on the Equity Strategy Desk would learn information about orders from institutional clients and use it to place trades with Merrill's own money.

"Investors have the right to expect that their brokers won't misuse their order information," Scott Friestad, associate director in the SEC enforcement unit, said in a statement. "The conduct here was clearly inappropriate."

The SEC also found that from 2002 to 2007, Merrill charged undisclosed fees to some institutional and high-net-worth customers when filling orders for "riskless principal trades."

Such trades occur when a broker-dealer receives a customer order, conducts a contemporaneous offsetting trade, and then "allocates" the securities to the customer, the SEC said.

Bill Halldin, a Bank of America spokesman, said in a statement that Merrill has adopted "a number of policy changes" to separate proprietary trading from other trading, and has improved training and supervision related to principal trades.

The SEC said the $10 million penalty took into account remedies taken by Merrill after Charlotte, North Carolina-based Bank of America acquired the company at the beginning of 2009. Bank of America is the largest U.S. bank by assets.

"The fact Merrill didn't self-regulate is the bigger problem," Robbins said. "I hope other firms will see this as a signal to stop trading on confidential customer information."

Do you really believe the U.S. is Done Bailing Out Banks? Ask Bank of America.

Do You Actually Believe the U.S. Gov.

is Done Bailing Out Banks?

Read...Read Again and Ask Yourself;

"Do You Feel Violated?" Well Do You?

The Atlantic
By Daniel Indiviglio
Other Really Good Reads by Daniel
1/4/2011

Some people who aren't familiar with the mortgage market might have gasped as they read the news that Bank of America would pay $3 billion to government-sponsored mortgage companies Fannie Mae and Freddie Mac. After all, $3 billion sounds like a lot of money. "Maybe BOA is finally getting what it deserves," some naive bank-haters might have exclaimed. In fact, paying this sum is an incredible win for the bank. The penalty is so small that it's effectively insignificant.

A Drop in the Bucket

For starters, it's important to remember that Bank of America also means Countrywide. After purchasing the ailing mortgage company in 2008, Countrywide's problems became BoA's problems. And according to the press release, this $3 billion loss provision the bank is taking should cover all Countrywide/BoA mortgages sold or guaranteed by Fannie and Freddie during the housing bubble.

How much is that? According to a Washington Post article on the story, it covers a BoA-Countrywide portfolio of about $530 billion held by Fannie and Freddie. That puts the loss rate on these loans that BoA will be responsible for at less than 1%. You don't need to be a mortgage analyst to know that a 1% loss doesn't begin to characterize housing's deterioration.

No Wonder the Market Celebrated

After this revelation struck, financial stocks were broadly up yesterday. This should come as no surprise. BoA-Countrywide together were originating more than to one-quarter of the mortgages created when the housing market was humming along in the middle of the last decade. If the losses imposed by Fannie and Freddie's put-backs are in the couple billion dollar range for BoA-Countrywide, then you only need to multiply by three to figure out what the rest of the market probably owes.

If this settlement is any indication, then the other banks and probably won't be responsible for much more than $9 billion of put-backs from the government entities. That's a loss they would be happy to endure, considering that the downside could have been well into the tens of billions of dollars. No wonder they're celebrating.

A Backdoor Bailout?

This settlement has a few implications. The most significant is that Fannie and Freddie are essentially admitting that the vast majority of their losses are their fault. The cost of the bailout alone to taxpayers is expected to easily exceed $150 billion. If it obtains a measly $12 billion or so from banks, that puts its responsibility at roughly 92%.

This means one of two things. The first possibility is that Fannie and Freddie really were so screwed up that banks rarely broke any rules or tricked these companies into buying and guaranteeing their garbage mortgages. This is actually somewhat plausible, considering that there was a relatively standardized system in place for selling mortgage risk to Fannie and Freddie. Any bad behavior by banks should be relatively easily identifiable through inaccurate or missing documents.

But the second possibility is that banks were, in fact, shady and Fannie and Freddie could legally push more of its mortgage losses to the banks, but has chosen not to do so. Why take such a strategy? The companies' willingness to let banks off easy could be politically-driven. It could be a sort of backdoor bailout.

How Fannie and Freddie Complicate the Role of Government

This latter possibility demonstrates the unfortunate situation the government has gotten itself into through its decision to stand behind Fannie and Freddie. On one hand, it doesn't want to see financial stability or the housing market thrown back into chaos. So it doesn't want to be too hard on the financial industry. On the other hand, it's duty is to act to minimize the loss to taxpayers from Fannie and Freddie.

If this settlement is a backdoor bailout, then the government has prioritized stability over taxpayers, again. Under these circumstances, the two are in conflict. Either Fannie and Freddie didn't have enough evidence to bring the banks to court to demand a higher settlement, or the bureaucrats who now run these entities chose not to, for the sake of the stability of the financial system and housing market.

Wall Street rewards Bank of America (one of their own) with a 6% increase in stock price

1/3/2011
Yes America, Wall Street looks after their fellow banksters and rewards them when the settlement for placing toxic garbage on the American taxpayer is better than expected.

As reported by By Tess Stynes  of The Wall Street Journal, Bank of America Corp. (BAC) expects to take a provision of about $3 billion in the fourth quarter to buy back bad loans from Fannie Mae (FNMA) and Freddie Mac (FMCC) that were issued by its troubled Countrywide Financial unit.

The move represents the latest effort by the Charlotte, N.C.-based banking giant, which acquired mortgage originator Countrywide in 2008, to respond to the housing crisis. Countrywide's mortgages turned into some of the worst mortgages issued during the crisis and, ever since Bank of America bought the lender, the bank has had to handle growing loan losses.

Fannie and Freddie have been stepping up demands that lenders take back defaulted loans when they find that the mortgages didn't conform to their lending guidelines. The two giant mortgage buyers have been operating under federal conservatorship since September 2008. Keeping them afloat has cost taxpayers about $134 billion so far.

Last week, Fannie reached a $462 million settlement with Ally Financial Inc. to cover potential repurchases on $292 billion in mortgages.

Taken together, the Ally Financial and Bank of America settlements will result in a recovery of $3.3 for taxpayers, the Federal Housing Finance Agency said.

"While these agreements are an important step, (Fannie and Freddie) have other outstanding claims across a range of counterparties and they are being pursued," said Edward DeMarco, acting director of the housing agency, in a statement.

Bank of America also said it has received confirmation from the Federal Reserve that the company fulfilled its commitment to boost its equity by $3 billion, a condition of its repurchase of $45 billion in preferred stock in December 2009 acquired as part of the Troubled Asset Relief Program. It faced a year-end deadline to raise the equity and sought to raise the capital by selling assets.

If it hadn't done so, it might have had to pay some employees' bonuses in stock instead of cash. The bank also had warned investors it might need to make a dilutive share offering to raise the capital. Instead, it sold such assets as 51.2 million shares in BlackRock Inc. and the right to purchase additional shares in China Construction Bank Corp.

As part of the loan repurchases, Bank of America's home loans and insurance business is expected to post a $2 billion write-down in the quarter. The bank said the charge will have no impact on its Tier 1 or tangible equity ratios.

"These actions resolve substantial legacy issues in the best interest of our shareholders," said Chief Executive Brian Moynihan. "Our goals remain the same: Put these issues behind us; focus on serving customers and clients; and continue to help distressed homeowners facing difficult times."

The agreement includes a cash payment of $1.28 billion to Freddie and $1.52 billion to Fannie, both of which were made Friday. Executives from both companies said the agreement is in the best interests of all parties.

Last week, Allstate Corp. sued Countrywide over $700 million in residential mortgage-backed securities in which the insurer had invested. The suit contains similar allegations other investors have raised with mortgage creators, namely that lax underwriting standards are to blame for the collapse of the investment vehicles.

"These actions resolve substantial legacy

issues in the best interest of our

shareholders," said Chief Executive

Brian Moynihan. "Our goals remain the same:

Put these issues behind us;

focus on serving customers and clients;

and continue to help distressed

homeowners facing difficult times."

(No mention of the billions of toxic garbage left on

the books of Fannie and Freddie. Mr. Moynihan merely

wants to put these "issues" behind him and let

the children and grandchildren deal with it.)

Wall Street Gets What It Wants (Mostly)

While Obama vowed to change the system,

he filled his economic team with people

who helped create it.

By Christine Harper
Dec. 28 (Bloomberg) -- Wall Street’s biggest banks, whose missteps caused a global financial crisis and economic slowdown two years ago, were more agile when it came to countering the political and regulatory response.

The U.S. government, promising to make the system safer, buckled under many of the financial industry’s protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives. Higher capital and liquidity requirements agreed to by regulators worldwide have been delayed for years to aid economic recovery.

“We continue to listen to the same people whose errors in judgment were central to the problem,” said John Reed, 71, a former co-chief executive officer of Citigroup Inc., who estimated only 25 percent of needed changes have been enacted. “I’m astounded because we basically dropped the world’s biggest economy because of an error in bank management.”

The last two years have been the best ever for combined investment-banking and trading revenue at Bank of America Corp., JPMorgan Chase and Co., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley, according to data compiled by Bloomberg. Goldman Sachs CEO Lloyd Blankfein, 56, and his top deputies are in line to collect more than $100 million in delayed 2007 bonuses -- six months after paying $550 million to settle a fraud lawsuit related to the firm’s behavior that year. Citigroup, the bank that needed more taxpayer support than any other, has a balance sheet 14 percent bigger than it was four years ago. The Rest of the Story on Wall Street Gets What it Wants

“It was very clear by February 2009 that the banks were going to get a free pass,” said Simon Johnson, a former chief economist for the International Monetary Fund who is now a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “You could see from the hiring of Tim Geithner and from the messages that he and his team were putting out that this was going to go very badly.”

Great Job Christine!

Bank of America agrees to pay $137 million for bid-rigging practices (you have an account w/them because...???)

Bank of America's Statement on Bid-Riggin Charges

The bank said in a statement that it has taken steps to ensure

"these or similar practices would not occur again." 

By DAN FITZPATRICK
The Wall Street Journal
12/7/10

Bank of America Corp. agreed to pay $137 million to federal and state authorities for municipal bid-rigging practices in the late 1990s and earlier this decade.

The agreement with 20 state attorneys general, banking regulators, the Department of Justice and the Securities and Exchange Commission is part of a larger push by the nation's largest bank by assets to rid itself of an array of legal headaches predating the financial crisis.

Earlier this year, the Charlotte, N.C., bank agreed to pay $108 million to settle charges that mortgage lender Countrywide Financial Corp. improperly charged customers before Bank of America purchased the firm in July 2008. The bank also reached a $150 million settlement with the SEC after the agency accused the bank of failing to disclose information during the acquisition of Merrill Lynch and Co.

Bank of America still faces a civil fraud lawsuit from New York Attorney General Andrew Cuomo, who accused the bank of deliberately misleading shareholders about ballooning losses at Merrill. It also is wrestling with several probes into its foreclosure practices, and mounting demands from mortgage investors that it repurchase large piles of troubled mortgages.

Bank of America's participation in a larger plan to fix prices in the municipal-bond derivatives market began in 1997 and lasted until 2004, according to the Justice Department. The scheme affected governments seeking to invest money earned through the issuance of municipal bonds.

Former employees colluded with bidding agents to have certain sales steered toward them, providing kickbacks to brokers and intentionally submitting losing bids "to foster the appearance of competition," said a group of state attorneys general that participated in the settlement.

The bank said in a statement that it has taken steps to ensure "these or similar practices would not occur again."  Complete Article

Goldman In Insider Trading Probe? by Matt Taibbi

By Matt Taibbi
Taibblog
11/20/10

News leaked out today that the feds will soon be herding a whole pen full of Wall Street firms into court on insider trading charges, including, reportedly, our old friends Goldman, Sachs.

The basic charge here is that investment banks and other firms were leaking insider info about things like mergers to closely-allied hedge funds, who in turn placed the requisite bets on or against the companies in question.

The most interesting detail in the WSJ piece, to me, was a bit about an email sent by one John Kinnucan, a principal at an Oregon-based company called Broadband Research, to a number of his clients. The email reads, in part, as follows:

"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information… (They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."

Aside from the amusing detail here in which Kinnucan brags about turning down an offer to cooperate with the feds (I ain't no stinking rat!) the thing to note here is the list of clients he sent this email to. Those include hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management.

Those are some interesting MF-ing names.

Citadel and SAC, along with Goldman and David Einhorn's Greenlight Capital, were among the firms subpoenaed by Lehman Brothers lawyers after that latter firm exploded in 2008. The allegation then was that a number of hedge firms worked with banks and other companies to spread rumors about Lehman at the same time some of those funds were holding big short positions.

Similar allegations, involving many of the same players, were made after Bear Stearns was blown apart in March of that year. There were multiple storylines in the that business, including one set of allegations that some hedge funds with short positions in Bear leaked information about Bear having a liquidity problem during that fateful week in March of 2008. Another extremely interesting detail, which I and others have reported on, involves the fact that all the big banks on Wall Street (including Goldman) and many of hedge funds (including Citadel) had a meeting at the Fed with Ben Bernanke just three days before the Fed announced its plan to subsidize the sale of Bear to JP Morgan Chase. This was on March 11, 2008; the only big bank that was not invited to this meeting was Bear, Stearns. It strains all credulity to imagine that the rescue of Bear was not discussed at that meeting and that none of the players at that meeting made moves based on those conversations.

The other crimes on Wall Street have been so pervasive and so massive in scope in the past decade or so that good old-fashioned insider trading — hedge funds and other gamblers robbing the great mass of uninformed investors by acting on exclusive intelligence not available to the rest of us — seems almost quaint. Compared to a situation in which the entire economy was based on fraud schemes like the mass sales of mismarked AAA-rated mortgage-backed assets, worrying about hedge-fund gamblers skimming a few billion here and there off of insider info seems almost misguided.

However there is a mounting pile of evidence suggesting a sort of widespread culture of insider trading in which a few players (specifically the major banks and a few of the biggest and best-connected hedge funds) have milked a seemingly endless stream of exclusive information, not occasionally or opportunistically but as an ongoing commercial strategy. I get about two or three letters a week from people in the finance business complaining that this or that company is openly advance-trading on a) information from the Federal Reserve about things like interest rate changes, or b) info about big client orders in things like commodities, or c) mergers and the like. Certainly there is a great deal to be suspicious of with regard to the behavior of certain companies in advance of major events like the rescue of Bear Stearns, the collapse of Lehman Brothers, the AIG bailout, the acquisition of Merrill Lynch by Bank of America, the emergency conversions to bank holding company status of Goldman and Morgan Stanley, and the announcement of major bailout programs like the TALF and the P-PIP.

Anyone who knew in advance how or when these deals were going down could make billions almost without trying, and we know that the heads of many of the major banks were in contact with key federal officials during this entire period. So there's that.

That's why it'll be interesting to see how far this federal probe goes. Many of the people I talk to insist that the insider-trading problem is a pervasive, systemic issue, not something that is isolated and limited to a few bad apples. So it'll be interesting to see if the Justice Department has a less indulgent view of insider crime than, say, Ben Bernanke's Federal Reserve. Not that I'm holding my breath for a huge roundup, but boy, wouldn't it be something if they aimed as high as this thing probably goes?

Attorneys General to Send Robo-Signer Banks to Bed without Dinner as Punishment

Log in yet another victory for the banks, as the attorneys general investigation appears to be winding down before too much additional energy and resources are expended. Banks hold more in their petty cash cigar box than the attorneys general have in their collective budgets.
 
It is really hard work to take on an investigation of this magnitude. The attoneys general received significant media time so they are assured re-election/reappointment, so lets come up with a half baked "compensation" fund and send the bankers to bed without dinner, (one time) and the attorneys general will spew how they have our back (just in time for the holidays). By February, bankers and regulators will be exchanging Valentine's Day cards.
 
Diana Olick
CNBC
11/16/10
 
Sources on both sides of the 50-state attorney's general investigation into so-called "robo-signing" foreclosure practices tell me they are nearing a settlement. As Bank of America, JP Morgan Chase and Iowa Attorney General Tom Miller square off today before the Senate Banking Committee, the framework of a deal is taking shape.
 
While sources say there is no universal solution to shoddy foreclosure practices at some of the nation's largest mortgage banks/servicers, the three largest, BofA, JPM and Wells Fargo, may be agreeing to the same solution.
 
First, banks would pay into a fund used to compensate borrowers who have claims after their home has been sold in foreclosure. The borrowers would have to prove they were wronged in the process, and the attorney's general would allocate the funds. In other words, the AGs would be the administrators. The amount of said fund is still undetermined, and likely still in negotiation. Each bank could settle on its own amount, or there could be a joint agreement.
 
Secondly, the banks would do away with the dual track of modifications and foreclosures. That means that only after all options of modification are exhausted can a bank begin foreclosure proceedings. Many borrowers currently complain that they are in the midst of the modification process when they get a notice of foreclosure sale. The drawback to eliminating the dual track is even greater extended timelines to foreclosure for borrowers. As it is, borrowers on average can be in their homes for a year and a half without making mortgage payments before eviction.
 
Finally, there would be some kind of agreement to third party mediation for review of all the cases in the first part of the agreement where borrowers are seeking compensation from the AG fund.
 
There has also been talk of principal write down as part of settlements, perhaps with some banks and not others. "It's been on the table," says one source.
 
In written testimony today, JP Morgan Chase's David Lowman admits, "Our process was not what it should have been; quite simply, it did not live up to our standards."
 
He outlines the bank's new quality controls, new employee training, and the creation of model affidavits that will comply with all local law requirements and be used in every case.
 
He also, however, claims, "the underlying information about default and indebtedness was materially accurate," and any paperwork issues "did not result in unwarranted foreclosures."
 
Iowa Attorney General Tom Miller said in an interview that I posted last week that the banks, as part of an agreement, "maybe instead of paying huge fines, they adequately fund the modification process." Miller doesn't suggest that in his written testimony before the Senate Banking Committee today, but he does focus quite a lot of the testimony on "missed opportunities" to improve mortgage modifications.

Bank of America (a.k.a. foreclosure-gate kingpin) manages a perfect trading record in Q3

Bank of Amerca can't get out of their

own way with foreclosures however they,

like JP Morgan Chase managed the manipulation

of the market superbly well in Q3 resulting

in a perfect quarter of trading.

By Dawn Kopecki
Nov. 9 (Bloomberg) -- Bank of America Corp. and JPMorgan Chase and Co., the two biggest U.S. banks by assets, racked up perfect trading records for the second time this year, making money every day last quarter after accomplishing the same feat in the first three months of 2010.

Traders at Charlotte, North Carolina-based Bank of America made more than $25 million on more than 55 days during the third quarter, the bank said in a Nov. 5 regulatory filing. New York- based JPMorgan, which doesn’t break out its results by quarter, made more than $200 million on 12 days in the first nine months and lost money on only eight, the company said today in a filing.

Goldman Sachs Group Inc., which makes the most revenue on Wall Street trading stocks and bonds, had losses in that business on two days in the third quarter while Morgan Stanley reported 10 losing days. Goldman Sachs and Citigroup Inc. both had perfect trading results during the first quarter.

Lower volatility and improving credit markets helped Wall Street’s trading results last quarter, said Jim Mitchell, a senior vice president at Buckingham Research Group in New York. “If you don’t have a lot of volatility and markets are generally positive, you don’t tend to have a lot of trading losses,” Mitchell said.

JPMorgan said its value at risk, a measure of the average amount the bank could lose on any given day, fell to $109 million in the third quarter from $178 million during the same period last year, driven primarily by a decline in market volatility.

Carry Trade

Chris Whalen, a former Federal Reserve Bank of New York analyst and co-founder of Institutional Risk Analytics in Torrance, California, said trading volume was also strong during the third quarter and banks benefited from the “carry trade,” the difference between their low cost of funds and the yield they earned on investments.

Trading revenue at eight of the biggest Wall Street firms declined an average of 12 percent through September from the same period a year earlier. Goldman Sachs generated 69 percent of revenue this year from trading, and said third-quarter trading results declined 36 percent. The seven days that New York-based Goldman Sachs made more than $100 million last quarter were the fewest since the fourth quarter of 2006.

Morgan Stanley said yesterday it made more than $100 million on one day last quarter, versus 18 days in the third quarter of 2009.

Morgan Stanley, also based in New York, had $1.43 billion in total sales and trading revenue for the third quarter, the lowest since the first quarter of 2009. Excluding losses and gains tied to its own credit spreads, Morgan Stanley generated $1.31 billion from trading fixed-income products, down 24 percent from the second quarter.

More homeowners are choosing to just walk away...and dump on the grandchildren!

By MARCELLA S. KREITER

CHICAGO, Oct. 29 (UPI) -- The financial crisis and ensuing recession apparently changed the mindset of Americans toward their homes, turning what long has been the American Dream into just another financial investment.

The result, strategic defaults -- people walking away from the property and mortgages not because they have to, but because they can.

The key consideration is time, said Jon Maddux, of You Walk Away, which helps people turn their properties back to their banks. Some experts estimate nearly a third of all mortgage defaults -- 31 percent -- are of the strategic variety. Empowering Homeowners Through Intelligent Strategic Default.

ReatlyTrac reported 2 million foreclosures in September and said one in 371 housing units received a foreclosure notice.

Easy mortgages made people glorified renters rather than proud homeowners, with no emotional or financial ties.

"People who made the decision to buy at the wrong time got stuck in a house that may not recover (its value) for 10 to 15 years. Does it make sense to keep it as an asset? No. It's throwing good money after bad when it takes so long to break even. So they decide to stop now. Their credit will recover in three or four years," Maddux told UPI. EXCUSE ME! Got stuck in a house? Getting stuck implies a situation typically beyond one's control like "stuck in the mud," "stuck in the snow," "stuck on hold," a private part "stuck in a zipper" but not stuck in a house.

"Life is too short," Jeff Horton, 33, of Orlando, Fla., told the Chicago Tribune earlier this month. Horton has $400,000 in mortgages with Bank of America and said he decided to walk away from his loans because he can't sell or rent the properties for enough money to cover the payments. Too short! Just imagine parental units stating life is too short to work this hard and feed and clothe my children. "Sorry kids but your self-centered, irresponsible mom and dad want to travel more and you are simply a financial drain on our dreams."

As the housing bubble burst, real estate values plummeted and homeowners found themselves "underwater" -- owing more than their homes were worth.

"I felt guilty at first," Horton told the Tribune. "It all stopped when I saw them (Bank of America executives) take $90 million in executive bonuses. They take bailout money and do nothing for the little guy. They wouldn't do anything for me." Oh you poor human. You must have been issued the rare birth certificate that assured you of no hardships regardless of your decisions in life. From my perspective, there is no viable defense for the banks however you and the banks share a common theme; dump your financial challenges on children and grandchildren?

Banks made the situation worse, giving people who wanted to refinance a hard time, even refusing to do anything for them at all -- sometimes because the homeowners were still making payments.

Chris Deaner of Sun City, Ariz., told CBS' "60 Minutes" he was fed up. Deaner and his wife bought a house in 2006 for $262,000 but the property is worth only $142,000 on today's market. He asked his bank for help.

"They refused to," he said. "They said it was gonna affect my credit and they were gonna take my house. And I pretty much said, 'Go for it.'"  Let me guess, you drive a new car off the lot and expect to be reimbursed for the incurred depreciation by the first semiphore?

The federal government has to take some of the blame. As Washington pushed banks to make homeownership easier, bankers heard "open the floodgates," Maddux said. Banks started offering no-money- or little-money-down mortgages to people who wouldn't be able to sustain the payments for the long-term, then bundled the mortgages into security instruments and sold them off.

"They (the banks) didn't hold the paper any more. … They felt no responsibility to make good loans," Maddux said. "They only had to be good for a little bit of time and then they could sell them off. It was make money quick and pass the hot potato."

Gone are the days of George Bailey's Building and Loan where the bank took its proceeds and invested them back into the community.

But home ownership still is usually one's biggest investment and there are indications attitudes toward mortgages are changing.

Freddie Mac, the Federal Home Loan Mortgage Corp., reported last week people are putting more money into their mortgages rather than taking out when they refinance -- something that was all but unheard of in recent years. The report said 33 percent of refinancers put more money into their principle, compared to 18 percent who pulled equity out.

Foreclosures are running 65 percent higher than last year in the third quarter, RealtyTrac reported.

"The underlying problems that are causing homeowners to miss their mortgage payments -- high unemployment, underemployment, toxic loans and negative equity -- are continuing to plague most local housing markets," RealtyTrac Chief Executive Officer James Saccacio said. "And these historically high foreclosure rates will continue until those problems are resolved."

And the foreclosure process itself is not without problems. A number of large mortgage lenders in the past month halted foreclosures because of paperwork errors and Wells Fargo last week admitted problems with 55,000 of its foreclosures, although saying the problems were minor and no one who was current on payments had been affected.

"People need to know a mortgage contract clearly spells out you have two options: You promise to pay and if you don't you'll give the property back to the lender. It's not a solemn oath you're going to pay," Maddux said.

YouWalkAway.com

Ask Yourself…

• Are you stressed out about your mortgage payments?
• Are you having trouble deciding if it makes financial sense to walk away?
• Do you need to move for work or family and can’t sell?
• What if you could live payment free for up to 8 months or more and walk away without owing a penny?

Unshackle yourself today from a losing investment and use our proven method to Walk Away. A Losing investment? Pork Bellies are an investment, an apartment building is an investment. The historical home ownership investment returns (excluding the housing bubble period) were absent on your site. Reason?

Dump it on Grandchildren Portion of the Program

We strive to help people understand their rights and know their options. Co-Founders Jon Maddux and Chad Ruyle began with the goal of helping homeowners navigate through the foreclosure process and understand foreclosure consequences by providing tools, resources, affordable legal and tax help, support and peace of mind. Since 2007, YouWalkAway.com’s foreclosure specialists have supported over 4,000 people prepare and strategically navigate through the foreclosure process.

YouWalkAway.com has positioned itself as leader in the industry. We develop a comprehensive and personalized plan for our members who seek assistance through a strategic default and want to understand and minimize foreclosure consequences, while offering unlimited support and individual attention. Helping homeowners on the frontlines of this market and economy, YouWalkAway.com is the nation’s foremost authority on foreclosure laws and consequences.

As Seen On the TV

Featured in a wide range of reputable and powerful media pieces, YouWalkAway.com is acknowledged for being a trustworthy and valid foreclosure resource agency. Our press coverage includes: features in Good Morning America, ABC Nightline, The Today Show on NBC, NBC Nightly News with Brian Williams, NPR, Fortune Magazine, Time Magazine, The New York Times, The Wall Street Journal, USA Today, and many more.

Assisting you with your own Blues Tune

Maddux is a published songwriter with Warner Music.

Comments by Grandpa not UPI